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May 3, 2023

Accessory Dwelling Units on the Rise

Accessory Dwelling Units or ADUs.  There are many reasons to have one and they’re a growing trend.  Appraisers need to be aware of possible changes to local laws regarding ADUs. Dallas is the latest municipal entity to jump into the effort to make it easier to add an ADU to a single family residence.  

This growing trend is something we believe appraisers should be very aware of and start to think about in terms of ADU valuation.  FreddieMac has reported on the potential increase in unit volumes, particularly in California and Texas.  

Accessory dwelling units, also known as granny flats, backyard cottages, or in-law suites, are secondary units that are typically built on the same lot as a primary residence. ADUs have become more acceptable in many municipalities for several reasons:

  1. Affordable housing: With the increasing cost of housing, ADUs provide an affordable housing option for families, students, and seniors. They can be rented out to tenants, allowing homeowners to supplement their income.
  2. Aging in place: ADUs provide an opportunity for elderly homeowners to age in place by providing a space for a caregiver or family member to live close by.
  3. Sustainability: ADUs can be built with sustainable materials and designed to be energy-efficient, reducing the environmental impact of housing.
  4. Flexibility: ADUs are versatile and can be used for a variety of purposes, including home offices, art studios, or guesthouses.
  5. Increased density: Many municipalities are looking to increase housing density to accommodate growing populations. ADUs can help meet this need without the need for new developments.
  6. Zoning changes: In recent years, many municipalities have relaxed zoning regulations to allow for ADUs. This has made it easier for homeowners to build them and has led to an increase in their popularity.

Overall, ADUs have become more acceptable in many municipalities because they provide an affordable, sustainable, and flexible housing option that can help meet the needs of a growing population.  It’s reasonable to expect to encounter them more frequently on an inspection and be ready to appropriately include them in the valuation.  

#adu #appraisals #valuation #freddiemac

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